Tuesday, April 25, 2006

Tourist Tax Fallacy

I need some help backing this up with data, but here's what I think about "tourist taxes" like the car rental tax and the prepared food and beverage tax:

1) they are mostly paid by non-tourists
2) people actually buy into the arguments that say otherwise (making it a fallacy)
3) local politicians feed on this ignorance

What is the best way to get evidence on the burden of the "tourist tax"? My dad operates a car rental agency and I have seen the people who rent the cars. Most of them are locals, but they still have to pay the combined 11% tax on rental cars.

I have to pay the prepared food and beverage tax every time I go out for lunch, even though I'm not a visitor. The fallacy can be summed up as this: Nearly all tourists rent a car or dine out. Therefore, a tax on prepared food and rental cars will be borne by tourists.

The fallacy could be corrected by admitting that: While nearly all tourists rent a car or dine out, most of the people who do so are not tourists. It follows immmediately that the tax burden in this case is not borne exclusively, or even largely, by tourists.

How can I test whether or not my intuition and anecdotal evidence give me the right impression?


At April 28, 2006 12:11 PM, Blogger Chris said...

Well, some of the companies might have some market research information that they could pass along to you.

You know how sometimes, they ask you your zip code when you make a purchase? If they asked each company in the county to attach that information to their current tax receipts (which they pay on a quarterly basis), then you would know right away.

The only problem with this, is that it is difficult to test and see if individuals are going to tell the truth, since it is a voluntary survey.

I am sure folks have done this sort of distributional measure for other taxes. You should check and see how they did it.

At August 06, 2006 6:56 PM, Blogger Chris Bishop said...

This comment has been removed by a blog administrator.

At August 06, 2006 7:07 PM, Blogger Chris Bishop said...

Hello everyone. I hope you guys are having a fantastic summer and have many ideas to contribut to SPEL this year. We have many ideas that will be discussed in person when everyone gets into town. The number 1 priority right now is running the "Busted: know your rights" lecture we had last year. That is a great way to get people interested and involved in the club. Also we need to come up with strategies for targeting the incomming freshman. Please use this blog as a place to brainstorm ideas. The successful "Busted" event last year was Andrews idea, so anything can happen.


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